NYAB's Q2 results came in clearly above our estimates on both revenue and profitability. As we had anticipated, revenue growth accelerated markedly as the record Civil Engineering order book began to transition from early-phase engineering into execution, and profitability improved year-on-year on the back of higher production volumes and normalizing operating leverage. Order intake remained healthy, and after the reporting period NYAB secured the Phase 2 construction contract for the Uppsala tramway (NYAB's 50% share is worth ~294 MEUR), the largest single contract in the company's history, which we believe strongly validates NYAB's Phase 1-to-Phase 2 strategy. Management commentary on market conditions and the contract pipeline remained reassuring, with no material changes to the outlook. Following Q2, we have made upward revisions to our 2026 estimates and lifted our 2027-2028 estimates to reflect the Q2 beat, Uppsala Phase 2 award, and an improved margin outlook. We maintain our Buy recommendation and raise the target price to SEK 8.4 (was SEK 7.8) on raised estimates.

Execution phase drives the top-line reacceleration

NYAB's Q2 revenue grew 19% year-on-year to 162 MEUR, clearly ahead of our estimate of 149 MEUR. The reacceleration played out largely as management had signaled following Q1, with the record Civil Engineering backlog beginning to transition from early engineering and design phases into execution, where revenue recognition is materially higher. The Civil Engineering segment drove the recovery, while the Consulting segment's revenue remained more subdued on a continued soft offshore market. Order intake stayed healthy, and the Civil Engineering order book rose to a new record of ~502 MEUR (Q1'26: 473 MEUR), further strengthened after the period by the Uppsala Phase 2 award. EBIT came in at 8.3 MEUR with a margin of 5.1% (Q2'25: 5.7 MEUR, 4.2%), clearly above our estimate of 6.9 MEUR (4.6%), where the beat was, in our view, primarily a function of improved operating leverage as production volumes recovered. This is consistent with our post-Q1 read that the earlier margin softness reflected phasing rather than a deterioration in underlying project profitability.

Raising estimates as execution and margins deliver

Following the Q2 print, we have raised our 2026 estimates (revenue +4%, EBIT +8%) to reflect the beat and the H2 volume ramp-up as the record backlog moves into execution. Our 2027-2028 revenue estimates were also lifted ~4%, mainly a carry-over effect from the higher 2026 base. As Uppsala Phase 2 (NYAB's 50% share: ~294 MEUR) is equity-method accounted, it contributes nothing to revenue or EBIT, but instead flows through as NYAB's share of the JV's after-tax result below operating profit. As such, our 2027-2028 EPS uplift (+15-13%) thus stems from our improved margin trajectory and lower estimated net financials, with the Uppsala JV added on top below the operating line. We remain somewhat cautious on Consulting, where the recovery is "a stepwise game", but our longer-term view is intact: NYAB is well-positioned for structural Nordic infrastructure drivers, particularly the energy transition, grid modernization, and transport infrastructure. The near-term catalyst we watch is the ~300 MEUR* of genuinely incremental early-phase pipeline, in addition to Uppsala Tramway, (Mikkeli data center ~100 MEUR, two SSAB contracts, and Svenska Kraftnät, ~136 MEUR), which management expects to convert during H2'26 and which, unlike Uppsala, flows through revenue.

Attractively priced with clear multiple upside

On our updated estimates, we believe the earnings-based valuation for the current year as well as for 2027 remains at very attractive levels (P/E: ~12x-10x, EV/EBIT: ~8x-7x), especially on EV-based multiples, which account for NYAB's strong balance sheet and net cash position. Relative to our acceptable valuation ranges (P/E: 12x-16x, EV/EBIT: 11x-15x), we continue to see clear upside potential in the multiples, as we believe the market still undervalues NYAB despite a business model that delivers structurally higher margins and greater scalability than broader legacy providers. In addition, our expected total return over the medium term remains well above our required return for the stock. Further support for our view comes from our SOTP** as well as our DCF model, which stand at SEK 8.2-10.5 and SEK 8.89 (was SEK 8.34), respectively.